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This really is the million dollar question right now. There are multiple different sources of news and economists predicting a variety of different outcomes in the months ahead. For example; the Chief Economist for Nationwide Robert Gardner reported he expects.
“A strong rebound once the shock passes”
and leading Behavioural Economist Roger Martin-Fagg also reported an anticipated a real uptick in the property market. Others such as Market Analyst business Jeffries have predicted up to a 20% drop in house prices.
There is no doubt in the short term the housing market has been affected, those of you that spend evening’s scrolling property websites searching for your dream home will have seen a marked reduction in the number of properties coming to market, the social distancing measures have meant that it is not appropriate to conduct physical Market Appraisals or indeed Viewings; that being said some agents are still able to undertake parts of their service virtually and some are still bringing a few properties to the market and also agreeing sales – but the numbers are low. This is of course affecting the natural supply and demand balance of the housing market. Further; it is entirely possible geographic weighting will have affect – maybe more people will seek to get that house with a study and a garden in a semi rural area; maybe buyers will flood back in to city centres as price competition for “prime real estate” reduces?
What does that mean for house prices in real terms?
It is completely uncertain. Ordinarily, if you are upsizing (as many do) in a market a drop in house prices can be a good thing as in real terms you “save” more money on your purchase. However, if the floodgates open and the pent up demand is as some predict – prices will rise and competition for “desirable” properties will drive prices up. If you are selling the same applies; it is virtually a very low odds lottery right now.
If I have already agreed a sale, how can I protect the price and terms I have agreed?
You may think the ability to protect the price you have agreed is a pipe dream, and if you are sitting as SSTC and awaiting exchange the longer that goes on the more chance you have of the price being affected, and you would be right. However, there is another way; many people are turning to reservation agreements in order to what is in effect “sure up” a sale that is ongoing. Buyers and sellers quite simply committing to each other and the agreed terms, on paper and financially. These reservation agreements are much more cost effective than covid clauses and indeed can take effective immediately, thus protecting everyone involved in the property transaction from an uncertain and volatile market.
Should I think about buying and selling now?
Speak to your local agent (the good ones are still working remotely in line with social distancing guidelines), it will likely depend on the market you are in and the type of property you own or are looking to own. With such low levels of property coming to market; if you are selling it may be a great time to get your property out there; and be ready for the possible pent up demand. Likewise, if you are buying; there is still plenty of property on the market from pre covid and it would be good idea, if you can to start speaking to agents now and registering your interest. Do your research and be savvy. Lenders are again offering a range of good mortgages and the interest rates will likely never be this low again.
The reality is no one truly can predict what will happen to prices, and no amount of financial modelling can offer certainty in such uncertain times so; for more help getting a reservation agreement to protect your sale or purchase; contact Gazeal at gazeal.co.uk or email firstname.lastname@example.org.